Swiss companies vetted for pandemic loan abuses

The Swiss state is guaranteeing most of the CHF40bn on offer to struggling Swiss firms. © Keystone / Gaetan Bally

The Swiss authorities say they are confident that fraudulent applications for emergency company loans can be weeded out during the coronavirus pandemic. More than 120,000 firms have asked for state-guaranteed loans, of which CHF14.6 billion had been issued since March.

The rescue package for companies forced to shut down during the pandemic was doubled to CHF40 billion last month. The loans make up the lion’s share of CHF57 billion in financial relief that has been rubber stamped by parliament.

But the unprecedented step to provide so much money at short notice has led to fears that unscrupulous firms and individuals could exploit the generosity by ripping-off the fund.

The State Secretariat for Economic Affairs (Seco) said on Friday that it was remaining vigilant about potential abuses and had uncovered 36 suspect cases.

Seco screening for applicants already in liquidation, those mis-stating their revenues, applying for multiple loans through different banks or firms that would misuse funds – for example, to pay dividends.

Seco’s Erik Jakob told a press conference that a series of measures set up to combat fraud should keep the number of abuses to a minimum. He said that a recent review of anti-fraud defences had shown the system to be robust.

These measures include cross-referencing loan application informationExternal link against data from the commercial registry and tax records. The 123 banks issuing loans also screen companies using standard anti-money laundering checks.

A special government department, set up specifically to review bridging loan applications, has been tasked with scrutinising documentation and checking that companies had not already entered into bankruptcy proceedings. The unit is authorised to issue civil or criminal complaints against miscreants.

The Federal Audit Office adds another layer of scrutiny, matching company revenue information against tax records and ensuring that the funds are not simply given to shareholders as dividends. Abnormalities are then flagged up to Seco.

The finance ministry earlier said it also looking into ways to beef up criminal sanctions to prosecute not just fraudulent firms but also company directors.